ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS

(e) Compensatory Arrangements of Certain Officers

On May 28, 2009, the Compensation Committee of the Board of Directors (the "Committee") of Exar Corporation ("Exar") approved Exar's Fiscal Year 2010 Executive Incentive Program (the "Program"). The Program provides bonus opportunities for fiscal 2010 for Exar's executive officers (including named executive officers Pedro (Pete) Rodriguez, J. Scott Kamsler, Thomas R. Melendrez and Stephen Michael) and other key employees selected to participate in the Program. Bonuses under the Program will be paid in fully vested shares of Exar common stock, with the total number of shares to be paid under the Program to be determined based on Exar's net revenue and non-GAAP operating income (loss) for fiscal 2010 against performance goals established by the Committee for purposes of the Program. For purposes of the Program, operating income (loss) is adjusted to exclude certain items from Exar's operating income as calculated under generally accepted accounting principles. The maximum number of shares that may be issued to all participants pursuant to the Program is approximately 835,000 shares. Any shares issued under the Program will be charged against the applicable share limits of Exar's 2006 Equity Incentive Plan. The Committee will determine how the total share pool will be allocated among the participants in the Program based on, among other factors, its assessment of the participant's individual performance during the fiscal year.

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